The market research firm estimated that spending on cloud computing by state and local governments will increase 22% annually from 2009 through 2014, or from $230 million to $620 million. The spending is on both internal and external cloud deployments. Overall, state and local governments spend about $56.6 billion on IT.

One model that may gain favor with state governments is providing IT services to local governments via their own state clouds. Utah and Michigan are developing cloud services that could be made available to other governments.

Local governments may also want to copy the Los Angeles deal with Google, said Input analyst Alexander Rossino. LA's move to replace its internally hosted e-mail system with Google Apps "could have a ripple effect," he said.

However, Rossino said many states are waiting for the federal government to establish standards and select its own cloud vendors.